I've posted about this client before. He's a sole trader who has been engaging the help of another sole trader to complete jobs. He does domestic plumbing work. His assistant is in reality an employee . He turns up where is told to go,told what to do, how to do it and invoice my client for 5 x £100 each week. This arrangement started in April 2013. They have decided to form a partnership, probably not 50/50, maybe 65/35. Is there any way to start that partnership from April 2013 seeing as no accounts or tax work has been done? I'm worried hmrc will look at 2013/14 and fine my client for not registering as an employer or a contractor. What would you do?
With regards to setting up the partnership, do they legally need a separate partnership bank acct?
Replies (4)
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Make up your mind
Is he "another sole trader" or "in reality an employee"? Whatever he may be, he has not been a partner and your client has not been trading as a partnership until the partnership is actually set up.
It depends on your attitude to re-writing history.
Agreed
A partnership can exist without a written agremeent - it will depend very much on the facts of the case. But in this case it's pretty clear that the actions of the parties would not support an argument that they've been trading in partnership.
To answer your questions -
What would you do?
What I would do is neither here nor there, the real question is what do YOU do. It sounds like you decided to be helpful and overlook some problems on the condition that things were brought into line, but are now having second thoughts.
It's simple really: either you play by the book and you loose the client plus he pays penalties or you 'fix' things. You decide.
With regards to setting up the partnership, do they legally need a separate partnership bank acct?
No, they do not need a separate account..